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REPORT OF THE COMMITTEE THURSDAY, June 22, 2000

 The Standing Senate Committee on Energy, the Environment and Natural Resources has the honour to present its

THIRD REPORT


Your Committee, to which was referred Bill C-11, An Act to authorize the divestiture of the assets of, and to dissolve, the Cape Breton Development Corporation, to amend the Cape Breton Corporation Act and to make consequential amendments to other Acts, has, in obedience to the Order of Reference of Thursday, June 15, 2000, examined the said Bill and now reports the same without amendment, but with observations which are appended to this report.

Respectfully submitted,

 

MIRA SPIVAK
Chair


 APPENDIX

Although the Committee is reporting the bill unamended, this does not mean that all Members of the Committee endorse the proposed legislation nor does it mean that some do not have serious reservations about certain aspects of the bill. It is the Committee’s opinion that the government, in its decision to privatize the Cape Breton Development Corporation (DEVCO), should consider the four key areas and recommendations discussed below.

During the Committee’s hearings considerable uncertainty was expressed about the size and duration of Cape Breton coal mining operations under private ownership. The Minister of Natural Resources assured the Committee that he is looking for a deal that is in the best possible interest of Cape Breton. The Minister told the Committee that "the objective of the government is to find a buyer who will make a long-term commitment to Cape Breton and who will maintain the most viable coal mining operation on a solid economic footing with the maximum number of possible jobs. That is the kind of buyer that we are looking for. The safeguard here is that any transaction needs to be approved in the first instance by the board of DEVCO. Second, as required by the law, it would have to be approved by the Government of Canada. We will be looking for a buyer who brings to the table in all of the circumstances the best possible arrangement for the long-term future of Cape Breton." In terms of the number of jobs, the Minister stated "something in the range up to 500 … It would be very useful to have a deal inked where there is a private sector buyer that specifies the number of employees."

As the bill ensures that the Canada Labour Code will prevail under private ownership, collective bargaining rights and collective agreements will flow through under new ownership. The Minister also indicated that DEVCO’s unions would have an opportunity to raise the issue of jobs and other workforce matters. Specifically, he said "[w]e have also indicated that at the appropriate stage in the commercial process there must be the usual discussions between any prospective buyer and the unions. Obviously, a number of human resources issues would be discussed between those two parties." Furthermore, the Chairman of DEVCO’s Board of Directors told the Committee that he did "not think any purchaser will buy the assets and close the deal without a collective agreement. That will not happen."

The Committee is encouraged by these statements and would like to strengthen them by recommending that no deal be concluded unless the purchaser has demonstrated that:

  1. it will maximize employment of the existing workforce to the greatest extent possible; and
  2. it is committed to the long-term commercial success of the Prince mine and any other assets involved in the purchase that could serve to increase coal production in the region.

The Committee is concerned about the fact that, under the provisions of Bill C-11, a deal to sell the assets of DEVCO is not subject to Parliamentary approval. Nevertheless, after a deal is concluded the Committee intends to exercise its right to examine the terms and conditions of the sale and hear evidence thereon.

For many miners and members of Cape Breton’s coal mining community, the Donkin mine and coal reserves represent the future of Cape Breton’s coal mining industry. In view of the importance of this valuable asset, the Committee recommends that a deal to sell DEVCO’s assets should facilitate the development of Donkin either by the purchaser or by another interest.

There is no question that coal mining has made a major contribution to the culture and economy of Cape Breton. For more than three decades, coal mining in Cape Breton has been largely conducted under the direction of the Cape Breton Development Corporation, a Crown agency initially established to gradually reduce economic dependence on this industry, while at the same time diversifying the economic base of the region. These goals have not been achieved. In recognition of the anticipated adjustment problems that could arise during a move to privatization, the government announced that it would spend $111 million on a workforce adjustment package and $68 million on long-term economic development. The workforce adjustment package has since been enhanced by roughly $50 million following an arbitration decision handed down by Bruce Outhouse, Q.C. Several witnesses told the Committee that, despite this enhancement, the workforce adjustment package falls short of the level of assistance that is required.

According to the testimony of Edna Budden, Chairperson of the United Families Organization, some 492 workers 45 years of age and over are not eligible for an early retirement pension under the enhanced workforce adjustment package. Many of these workers have no realistic alternative employment outside the coal mining industry. Nor can we be certain how many of DEVCO’s remaining workers will find employment in a privatized coal mining operation. The Committee regrets that these workers and their families have had to endure so much uncertainty and believes that more should be done to ease the burden of adjustment on those displaced by privatization.

It is important to note that the enhanced adjustment package (i.e. including Bruce Outhouse’s arbitration award) is premised on assumption that privatization will provide some 500 jobs. It is clear to the Committee that if these jobs are not realized it will be necessary for the government to amend the workforce adjustment package accordingly. Likewise, it should be noted that Bruce Outhouse wrote in his arbitration decision (see page 28) that "[s]hould there be a future downsizing or closure at Prince, then a new Adjustment Program will have to be put in place for them [the workers] at that time."


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